In today’s briefing:
- 2023 High Conviction: Haw Par Is Cheap
- Liquid Universe of European Ordinary and Preferred Shares: November ‘22 Report
- Kaken Pharmaceutical (4521 JP): H1FY23 Review- Key Drugs Continued to Fall; Guidance Reiterated
- HCG: All Set for a Stellar FY24
2023 High Conviction: Haw Par Is Cheap
- Haw Par Corp (HPAR SP) is trading around multi-year trough levels on an implied stub valuation, and on an HPAR/UOL Group (UOL SP) ratio.
- Preceding my comments on HPAR are the current setup/unwind tables for Asia-Pacific Holdcos.
- These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.
Liquid Universe of European Ordinary and Preferred Shares: November ‘22 Report
- Since mid-September, spreads have shown a mixed performance across our liquid universe with a slight bias towards widening (10 have widened, 8 tightened, 1 at same level).
- Trade recommendations long ords / short prefs: Fuchs Petrolub, Ericsson, Handelsbanken, SSAB Svenska Stal.
- Trade recommendations long prefs / short ords: Sixt, VW, MFE-Media for Europe, Grifols, Atlas Copco.
Kaken Pharmaceutical (4521 JP): H1FY23 Review- Key Drugs Continued to Fall; Guidance Reiterated
- In H1FY23, Kaken Pharmaceutical (4521 JP) reported 2% revenue decline to ¥36.8 billion, as the company’s key branded drugs, including Clenafin, Artz, and Seprafilm are recording decelerating sales.
- Newer drugs, including Ecclock, Regroth, and Hernicore reported revenue growth of 47.8%, 4.1%, and 4.1%, y/y, respectively. However, these three drugs contributed just 4% of total revenue.
- Lower revenue and higher operating expenses (+2% y/y) pulled down operating profit by 9% y/y to ¥8.2 billion. Operating margin decreased 170bps to 22.3%.
HCG: All Set for a Stellar FY24
- HCG posted decent revenue growth in Q2FY23. Its new centers also saw improved profitability with scale.
- HCG has been rolling out price increase across its network which alone should help it to expand margins by 100-150bp in FY24.
- With new centers maturing, HCG is gearing up for a stellar FY24 and FY25. As per our estimates, HCG is on track to post FY25 PAT of INR 170cr+.
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